STATE OF Lam? OFFICE OF THE GOVERNOR SALT LAKE CITY 84114 NORMAN H. GOVEHNOR Public Hearing Docket No. EPA REPORT TO CONGRESS MANAGEMENT OF WASTES FROM THE EXPLORATION, DEVELOPMENT, AND PRODUCTION OF CRUDE OIL, NATURAL GAS, AND GEOTHERMAL ENERGY Comments From Governor Norman H. Bangerter State of Utah February 25, 1988 Denver, Colorado I am Val Dveson, Lt. Governor for the state of Utah. I am presenting comments on behalf of Governor Bangerter, who is unable to be here today. I appreciate this opportunity to present Utah's recommendations in support of the determination by the Environmental Protection Agency that wastes from oil, gas, and geothermal exploration, development, and production should not be regulated as hazardous wastes. Utah is experienced in regulating oil, gas, and geothermal operations. The first commercially producing oil well was crilled in l9as, although exploration dates back to 1891. Geothermal exploration and development began in earnest in the mid-19705. Clearly. energy resource development is critical to Utah's economy. Page 2 EPA REPORT TO CONGRESS Utah Governor's Comments In 1986, production included 39.2 million barrels of oil, 238 billion cubic feet of gas, and llh.7 million barrels of produced water. Geothermal energy, for power generation and direct heat applications, is a small but important segment of our energy resource base. Approximately 25.7 megawatts are generated from two geothermal fields, alang with about a dozen public and commercial direct heat utilization projects. Yet, these resources can only be developed in a manner which protects Utah's environment. As an arid western state, we are keenly aware of the value of safe, usable ground and surface water resources. Protection of the environment, including water resources, and the health and safety of our citizens are of paramount importance. Utah has continued to review and revise petroleum and geothermal regulatory programs to accomplish those goals. Because of these vested interests, and based on our regulatory experience in petroleum and geothermal exploration and development, we support the following rec0mmendations: Wastes from oil, gas, and geothermal Exploration, development, and production activities should not be classified as hazard0us wastes under Subtitle of the Resource Conservation and Recovery Act and Pa 3 EPA REPORT TO CONGRESS Utah Governor's Comments 2. Responsibility for regulation of oil, gas, and geothermal exploration, development, and productions wastes should remain with the states. We support the EPA recommendation, from their December 1987 Report to Congress, that the classification of these wastes as hazardous under Subtitle is neither desirable nor feasible. Furthermore, it is unnecessary. As noted in the report, regulation under Subtitle would result in significant additional regulation and cost, to the states, the federal government, the industry, and ultimately the consumer. The EPA report suggests impacts of as much as $12 billiOn in additional annual compliance costs. In Utah, petroleum drilling and equipping costs are approximately $130 per foot, second only to Alaska. The additional cost for hazardous waste management will make many wells uneconomical to drill, and many existing wells uneconomical to produce. At a time when world market prices have reduced domestic production, at a time when the United States most reduce its dependence on foreign petroleum imports and implement a viable energy policy, we cannot afford to bury ourselves and the industry in overregulation and unnecessary cost. The issue is overregulation, not "no regulation". As recognized in the Report to Congress, state regulatory programs, which include effectiveness. Page a EPA REPORT To CONGRESS Utah Governor's Comments primacy authority for federal programsI are already providing the 'necessarv regulation of these wastes. In Utah. as well as other oil producing states. additional ?federal regulation will add duplication and cost. but not In all cases. states have developed regulatorv programs to meet the common as well as the unique operational problems of their environment. In Utah. for instance. all oil and gas drilling, development. and production within the state is regulated by the Utah Division of Oil, Gas and Mining. In 1983. the state program was recodified, to provide additiOnal reporting and environmental regulation of operations. along with the necessary increases in technical staff and state funding. Regulation includes siting. construction. and reclamation of wells and reserve pits; disposal of drilling fluids and cuttings; cementing; completion: disposition of produced water; and plugging of wells. All injection wells are regulated through the Division's Underground Injection Control Program. with primacv from the Environmental Protection Agency. At the time of the EPA studv. the Utah Division of Environmental Health regulated produced water disposal pits. That program has now been transferred to the Division of 011, Gas and Mining. The Division of Water Rights regulates geothermal wells under a comprehensive 1981 statute. with similar authority and in coordination with the Division of Environmental Health. The Division of Environmental Health. through federal primacy. regulates F. .. 3-. -. NIH FIN FIN H-H hi! Page 5 EPA REPORT TO CONGRESS Utah Governor's Comments NPDES discharge to surface waters. 0n federal lands, comprising 67 percent of Utah, state divisions work closely with federal agencies to assure compliance while helping to reduce costs and improve effectiveness of regulatory programs. The EPA recognized in its report that when damage or risk did occur, the majority of those cases were violations of existing state regulations. This suggests a need to support existing regulation and enforcement, not development of a new layer of regulation. If there are areas where state regulations need to be more effective, the Environmental Protection Agency should work with the state to address those specific concerns. The states should continue to regulate these wastes through existing programs. The state of Utah will also submit comments in writing. In closing, I want to emphasize the need to support, not redesign, the existing system for regulating oil field and geothermal wastes. Thank you for your time and your serious consideration of these comments. STATE OFOKLAHOMA HENRY BELLMON an I I OFFICE OF THE GOVERNOR I OKLAHOMA STATEMENT OF THE HONORABLE HENRY BELLMON GOVERNOR OF OKLAHOMA TESTIMONY ON THE ENVIRONMENTAL PROTECTION AGENCY REPORT TO CONGRESS ON THE MANAGEMENT OF HASTES FROM THE EXPLORATION, DEVELOPMENT, AND PRODUCTION OF CRUDE OIL, NATURAL GAS. AND GEOTHERMAL ENERGY DALLAS. TEXAS MARCH 8. 1988 DOCKET NO. MY NAME IS HENRY BELLMON, GOVERNOR OF THE STATE OF OKLAHOMA. I AM PLEASED TO HAVE THIS OPPORTUNITY TO TESTIFY ON THE ENVIRONMENTAL PROTECTION REPORT TO CONGRESS ON THE MANAGEMENT OF HASTES FROM THE EXPLORATION. DEVELOPMENT. AND PRODUCTION OF CRUDE OIL. NATURAL GAS, AND GEOTHERMAL ENERGY. I APPEAR AS A REPRESENTATIVE OF THE STATE OF OKLAHOMA. 1N PRIVATE LIFE. I AM A FARMER AND LAND OHNER IN AN AREA HHERE OIL AND GAS DEVELOPMENT HAS BEEN IN CONTINUOUS PROGRESS FOR THE LAST 70 YEARS. OKLAHOMANS NHO HAVE HAD LONG CONTACT HITH OIL AND GAS DRILLING NERE DISMAYED NHEN THE DRAFT REPORT PREPARED BY CONTRACTORS HAS RELEASED. THE REPORT CONTAINED NUMEROUS UNSUBSTANTIATED ALLEGATIONS. AS HELL AS CONSIDERABLE FACTUAL ERRORS IN THE DAMAGE CASES. NE ARE PLEASED TO KNOH THAT THE FINAL REPORT HAS TONED DOWN THESE ACCUSATIONS AND PRESENTS A MUCH MORE ACCURATE PICTURE OF THE OIL AND GAS INDUSTRY IN THE UNITED STATES. HOHEVER. THERE ARE SEVERAL ITEMS IN THE REPORT HHICH STILL CONCERN ME. I AM PARTICULARLY. CDNCERNED THAT INFORMATION FOUND IN THE DAMAGE CASES IN THE REPORT APPENDIK HAS NOT COLLECTED TO INSURE ACCURACY. IN CASE. THE EPA CONTRACTOR SPENT ONLY ABOUT 30 MINUTES HITH THE STAFF OF THE CORPORATION COHIISSION HHICH REGULATES OIL AND GAS ACTIVITIES. AND DISCUSSED ONLY ONE OF THE CASES. ONE OF THE CASES PRINTED IN THE FINAL REPORT, OK-OZ. STILL CONTAINS FACTUAL ERRORS. I DO NOT EXPECT EVERYONE TO BE FAMILIAR HITH THE OKLAHOMA ROAD MAP, BUT AFTER BEING TOLD ONCE, YOU HOULD THINK THEY HOULD UNDERSTAND THAT STILLHATER IS NOT IN MCCLAIN COUNTY, IT IS 80 MILES TO THE NORTH. THE AGRONOMIST HHDSE REPORT IS MENTIONED HAS NEVER A STUDY ON THE OVERALL REPORT BY THE OKLAHOMA INDEPENDENT PETROLEUM ASSOCIATION LISTS SEVERAL ERRORS. AMONG THEM HERE THE FACT THAT THERE IS NO IRRIGATION HELL ON THE PROPERTY, AS ALLEGED IN THE REPORT, AND THE ONLY SOIL TESTED HAS UNDER A SALTHATER DISPOSAL LINE HHICH HAD LEAKED, NOT IN THE SURROUNDING AREA AS SUGGESTED. I AM AHARE OF THE EPA DISCLAIMER THAT THESE DAMAGE CASES ARE TOO FEH IN NUMBER FOR STATISTICAL SIGNIFICANCE, BUT THEY HILL BE READ AND JUDGMENTS MADE UPON THEM. I AM ALSO CONCERNED ABOUT STATEMENTS MADE IN REFERENCE TO STRIPPER HELLS. THERE CAN BE NO DISAGREEMENT THAT STRIPPER HELLS PROVIDE A SIGNIFICANT PORTION OF THIS CRUDE OIL PRODUCTION AND THAT THEY HAVE A HIGHER RATIO OF PRODUCED HATER TO OIL PRODUCED. HOHEVER. THIS HIGH RATIO DOES NOT IN ITSELF INDICATE ANY GREATER PROBLEM IN HASTE DISPOSAL THAN LESS MARGINAL HELLS. ADDITIONALLY, EPA MAKES STATEMENTS ABOUT POTENTIAL DAMAGES TO THE ENVIRONMENT N. FRON CURRENT PRACTICES NITHOUT OFFERING ANY SUBSTANTIVE PROOF THAT THESE PRACTICES HAVE IN FACT RESULTEO IN ENVIROINIENTAL DAMAGE. IN OKLAHOMA, THE CORPORATION COVNISSION HAS HADE EVERY EFFORT To ADDRESS ENVIRONMENTAL CONCERNS AS THEY RELATE To EXPLORATION AND PRODUCTION. THE RULES AND REGULATIONS ARE DESIGNED NITH THE PROTECTION OF THE SURFACE AND SROUNDVATER RESOURCES IN NIND, AND ADDRESS SPECIFIC NEEDS AND REQUIREMENTS ON A REGIONAL BASIS VITNIN OKLAHOMA. THESE RULES ARE A RESULT OF COORDINATION BETVEEN STATE AND FEDERAL AGENCIES. THE PUBLIC, AND INDUSTRY REPRESENTATIVES. ALL ARE CONCERNED AND DESIRE RULES THAT ARE NORRADLE. ENFORCEADLE, AND PERMIT THE CONTINUAL DEVELOPNENT OF HYDROCAROOH RESERVES. I HOULD ALSO POINT OUT THAT UNDERGROUND INJECTION CONTROL PROGRAM HAS THE FIRST TO BE APPROVED UNDER THE SAFE DRINKING HATER ACT. IT HAS SERVED AS A MODEL FOR OTHER STATES. THE RESOURCE CONSERVATION AND RECOVERY ACT (RCRA) AMENDMENTS OF 1980 REQUIRED EPA TO STUDY THE POTENTIAL ECONOMIC IMPACT IMPOSING HAZARDOUS HASTE REGULATIONS ON OIL AND GAS EXPLORATION AND PRODUCTION HASTES. AS HELL AS HITH THE ENVIRONMENTAL IMPACT AND REGULATORY DATA. ANALYSIS ESTIMATES AN 18 PERCENT DROP IN PRODUCTION BY THE YEAR 2000 AND A 29 PERCENT REDUCTION BY 2010 IF OIL AND GAS HASTES HERE LABELLEO HAZARDOUS. MAINTAINING AND ENHANCING THE U.S. ENERGY POSITION HAS BECOME DIFFICULT ENOUGH SINCE OPEC TOOK OVER CONTROL OF OUR RESOURCES. ADDITIONAL PRODUCTION LOSSES MUST BE JUSTIFIED. THIS STUDY THESE ARE NOT. THE EPA ESTIMATE FOR THE ANNUAL DIRECT COST PASSED ON TO CONSUMERS IS SS BILLION. A STUDY BY THE AMERICAN PETROLEIM INSTITUTE Twa?_ PROJECTED A COST TO THE PETROLEUM INDUSTRY OF $44 BILLION THE FIRST YEAR ALONE TO COMPLY WITH FULL SCALE HAZARDOUS NASTE REGULATIONS. AND $5 BILLION ANNUALLY THEREAFTER. HHOSE FIGURES ARE USED, THE COSTS ARE ENORMOUS. GIVEN THE IMPORTANCE OF THE OIL AND GAS INDUSTRY TO OUR ECONOMIC HEALTH AND SECURITY, EXTREME CARE MUST BE USED HHEN CONSIDERING ADDITIONAL FEDERAL REGULATORY SCHEMES. SIXTY PERCENT OF OUR CURRENT ENERGY NEEDS COME FROM HYDROCARBON RESOURCES: OUR DEPENDENCE UPON PETROLEUM IS EVEN MORE FOCUSED NHEN CONSIDERING THE ALMOST TOTAL DEPENDENCE OF THE TRANSPORTATION SECTOR (INCLUDING THE MILITARY) ON PETROLEUM PRODUCTS. NO ALTERNATIVE TO THIS LIOUID FUEL DEPENDENCY IS AVAILABLE IN THE FORESEEABLE FUTURE. IF THE LEVEL OF IMPORTS IS ALLOHEO TO RISE AND THE INDUSTRY AND CONSUMER COSTS ARE REALIZED, AS MENTIONED PREVIOUSLY. THEY HILL HAVE A OEVASTATING EFFECT ON OUR ABILITY TO MAINTAIN OUR ECONOMIC STATUS AND NATIONAL SECURITY. EPA HAS DISCUSSED SOME OTHER ISSUES NITH NHICH IT HAS AN ONGOING CONCERN-- PRODUCED HATER DISCHARGES INTO SURFACE NATERS, THE DEGRADATION OF GROUNDHATER FROM ABANDONED OR IMPROPERLY PLUGGED NELLS, AND THE LEVEL OF ENFORCEMENT OF THE REGULATORY PROGRAMS. ANY DISCUSSION OF THESE ISSUES SHOULD BEGIN HITH THE STATE REGULATORY AUTHORITIES. IF THERE ARE DEFICIENCIES IN STATE PROGRAMS, RESPONSE SHOULD BE TO HORK HITN THE STATES TO IMPROVE ITS PROGRAM, NOT TO IMPOSE ANOTHER LAYER OF REGULATORY BUREAUCRACY. CONCERNS SUCH AS SURFACE DISCHARGES AND ABANDONED NELLS, HHICH MIGHT AFFECT A NUMBER OF STATES, CAN BE HANDLED BY THE DEVELOPMENT OF A CLOSE HORKING RELATIONSHIP NITH THE INTERSTATE OIL COMPACT COMMISSION, THE ORGANIZATION OF OIL AND GAS PRODUCING STATES. THE IOCC HAS BEEN LONG INVOLVED IN THE ISSUE OF THE PRODUCTION AND CONSERVATION OF OIL AND GAS IN AN ENVIRONMENTALLY RESPONSIBLE MANNER AND HAS ASSISTED EPA IN THIS STUDY. STATE PARTICIPATION IN THE REVIEH OF THE EPA STUDY HAS COORDINATED BY THE IOCC AND ITS COMMITTEES HAVE MANY STATE GOVERNMENT AND INDUSTRY OFFICIALS NHOSE EXPERTISE HILL BE INVALUABLE TO EPA IN ANY REVIEH OF ENVIRONMENTAL STANDARDS. I SUPPORT CONCLUSION THAT THE FULL RCRA REGULATIONS APPEAR UNNECESSARY AND IMPRACTICAL AT THIS TIME, BUT I HOULD GO ONE STEP FURTHER--IT IS UNNECESSARY AND IHPRACTICAL. PERIOD. DECISION TO RECOMMEND NO ADDITIONAL REGULATION DOES NOT MEAN THAT AN INDUSTRY HILL GO UNREGULATED--RATHER THAT IT RECOGNIZES THE ABILITIES OF THE STATE AGENCIES TO REGULATE OIL AND GAS ACTIVITIES HITH PROPER CONCERN FOR HEALTH AND THE ENVIRONMENT. AND THE IMPORTANCE OF THE OIL AND GAS INDUSTRY TO THE SECURITY OF THIS NATION. pa?n? pal-Q l?ud - .-.- TESTIMONY OF GOVERNOR STEVE COWPER STATE OF ALASKA BEFORE THE v.5. ENVIRONMENTAL PROTECTION AGENCY MARCH 3, 1933 ANCHORAGE, ALASKA GOOD MORNING. WELCOME TO ALASKA. I AM STEVE COWPER, GOVERNOR OF THE STATE OF ALASKA. I WANT TO EXPRESS MY APPRECIATION TO THE ENVIRONMENTAL PROTECTION AGENCY FOR HOLDING THIS HEARING IN ANCHORAGE SO THAT THE COMMENTS AND CONCERNS OF ALASKANS CAN BE CONSIDERED AS PART OF THE REVIEW OF DRILLING WASTE MANAGEMENT PRACTICES. I AM PLEASED TO TESTIFY HERE TODAY IN SUPPORT OF THE .ENVIRONMENTAL PROTECTION DETERMINATION NOT TO PLACE WASTES FROM THE PRODUCTION OF OIL AND NATURAL GAS UNDER THE HAZARDOUS WASTE REGULATIONS OF THE RESOURCE CONSERVATION AND RECOVERY ACT (RCRA). I SPEAK BOTH AS GOVERNOR OF ALASKA AND AS INCOMING CHAIRMAN OF THE INTERSTATE OIL COMPACT COMMISSION (IOCC). THE IOCC IS THE ORGANIZATION OF OIL AND GAS PRODUCING STATES, DEDICATED TO THE CONSERVATION OF THESE VITAL RESOURCES. THE 29 ACTIVE MEMBER STATES ARE ALSO CONCERNED WITH ENVIRONMENTALLY SAFE METHODS OF PRODUCING THAT OIL AND GAS. REGULATION OF DRILLING WASTES IS AN ISSUE OF GREAT CONCERN TO ALASKANS. IT IS OF GREAT INTEREST TO THE INDUSTRY BECAUSE OF THE I-II II-I lull OPERATIONAL AND FINANCIAL IMPLICATIONS OF THE FINAL DECISION. IT IS OF GREAT INTEREST OF THE CITIZENS OF ALASKA. THE ENVIRONMENTAL PROTECTION AGENCY HAS RELEASED ITS REPORT TO CONGRESS ON DRILLING WASTE MANAGEMENT PRACTICES AND RELATED RISKS TO PUBLIC HEALTH AND THE ENVIRONMENT. INCLUDED IN THIS REPORT IS THE CONCLUSION THAT PETROLEUM PRODUCTION WASTES SHOULD REMAIN EXEMPT FROM REGULATION AS HAZARDOUS WASTES UNDER THE RESOURCE CONSERVATION AND RECOVERY ACT. CONGRESS EXEMPTED THESE WASTES AND REQUIRED THAT EPA GO BACK AND LOOK AT WHETHER THE EXEMPTION WAS APPROPRIATE. WHILE THESE WASTES HAVE NOT BEEN REGULATED UNDER FEDERAL AUTHORITY, STATES HAVE DEVELOPED AND BEEN IMPROVING REGULATIONS TO ADDRESS THEM. THE STATE OF ALASKA HAS PARTICIPATED IN THE ENVIRONMENTAL PROTECTION EVALUATION OF DRILLING WASTE DISPOSAL PRACTICES. WE APPRECIATE VERY MUCH THE OPPORTUNITY TO PARTICIPATE AS ONE OF THREE STATES ON THE WORK GROUP THAT DEVELOPED THE REPORT THAT IS THE SUBJECT OF THIS HEARING TODAY. ALASKA IS RESPONSIBLE FOR ONE-QUARTER OF THE PRODUCTION OF PETROLEUM IN THE UNITED STATES. ANY DETERMINATION THAT SUBSTANTIALLY AFFECTS THE WAY THE INDUSTRY OPERATES WILL ALSO AFFECT THE STATE. BEFORE US TODAY IS THE REPORT ON THE RESULTS OF ITS DELIBERATIONS OVER HOW DRILLING WASTES SHOULD BE REGULATED. WE sad-29' SUPPORT THE CONCLUSION THAT WASTES ASSOCIATED WITH PETROLEUM PRODUCTION NEED NOT, AS A GROUP, BE REGULATED AS HAZARDOUS WASTES UNDER THE RESOURCE CONSERVATION AND RECOVERY ACT. FOR THE MOST PART, WE BELIEVE THAT THESE WASTES CAN AND SHOULD BE REGULATED AS SOLID OR LIQUID WASTES UNDER STATE AUTHORITIES. IN ALASKA, WE HAVE RECENTLY ADOPTED REGULATIONS THAT SPECIFICALLY COVER THE MANAGEMENT OF DRILLING WASTES AS SOLID WASTES. THE NEW REGULATIONS WILL PROVIDE DIRECTION AND CERTAINTY TO THE APPROACH TO THIS ISSUE. OUR STATE REGULATIONS WERE DEVELOPED AFTER A CONSULTATIVE PROCESS WITH THE INDUSTRY AND THE PUBLIC THAT EXTENDED OVER MORE THAN TWO OUR NEW REGULATIONS EMPHASIZE CONTAINMENT 0F WASTES. TO CARRY OUT THE NEW REGULATIONS, I HAVE REQUESTED FROM THE STATE LEGISLATURE A BUDGET INCREASE FOR THE DEPARTMENT OF ENVIRONMENTAL CONSERVATION WHICH IS RESPONSIBLE FOR ENFORCING THESE REGULATIONS. THIS WILL ALLOW THAT DEPARTMENT TO BEGIN TO IMPLEMENT THE REGULATIONS. THAT INCREASED CAPACITY AT DEC IS ESSENTIAL TO CONTINUE THE PROGRESS THAT HAS BEEN MADE TO DATE. WE RECOGNIZE THAT CORRECTIVE ACTIONS WILL BE NEEDED AT SOME SITES. WITH THE NEW REGULATIONS AND THE PROPOSED BUDGET INCREASE, WE ARE WELL ON OUR WAY TO TAKING THE NEEDED STEPS. i I IN LIGHT OF STATE CAPABILITY TO APPROPRIATELY REGULATE DRILLING WASTES, WE SUPPORT CONCLUSIONS THAT THESE WASTES SHOULD NOT BE REGULATED UNDER SUBTITLE OF THE RESOURCE CONSERVATION AND RECOVERY ACT. MOREOVER, I BELIEVE THAT REGULATION OF THESE WASTES UNDER WOULD BE COUNTER-PRODUCTIVE, BECAUSE OF THE GREAT AMOUNT OF RESOURCES THAT WOULD HAVE TO BE DEVOTED TO THE TECHNICAL AND ADMINISTRATIVE ASPECTS OF THIS APPROACH. USE OF THE FEW AVAILABLE RCRA DISPOSAL FACILITIES TO DISPOSE OF DRILLING WASTES IS A POOR USE OF A LIMITED RESOURCE. STATE REGULATIONS CAN BEST ADDRESS THE INDIVIDUAL NEEDS AND ENVIRONMENTAL CONDITIONS IN EACH STATE. EVEN IN ONE STATE, SUCH AS ALASKA, WE HAVE FOUND THAT FLEXIBILITY IS NEEDED TO ADDRESS THE VARIETY OF CONDITIONS THAT MAY BE ENCOUNTERED. THANK YOU FOR THE OPPORTUNITY TO COMMENT. I HOPE THAT WE WILL BE ABLE TO CONTINUE TO WORK CLOSELY WITH YOU ON THIS AND OTHER 7 IMPORTANT ISSUES . - ?In. m-q h?Iwvawu? - - COMMENTS OF WEST VIRGINIA GOVERNOR ARCH A MOORE. JR. ON THE EPA REPORT TO CONGRESS ON MANAGEMENT OF WASTES FROM THE EXPLORATION, DEVELOPMENT AND PRODUCTION OF CRUDE OILI NATURAL GAS AND GEOTHERMAL ENERGY FEBRUARY 25, 1988 u-q u-q rang I an Arch A. Moore. Jr.. Governor of the State of West Virginia. It is my pleasure to submit these comments on a matter of great importance not only to the State of West Virginia, but also to the Appalachian region, and the nation. Your study of waste produced by the oil and gas industry to determine whether or not it should be made subject to new regulatory requirements is a matter of such magnitude as to justify the enormous commitment of resources that has been and will continue to be dedicated by you and by others to an assessment of this issue. The oil and gas industry is of major?importence to us all. Beyond the contribution which the industry makes to our society in terms of jobs and tax revenue, the oil and gas industry plays a vital role in our balance of payments and national security. We simply cannot continue to rely on energy sources that are external to our borders and vulnerable to the volatilities of foreign governments. In the State of West Virginia. the oil and gas industry is an important contributor to the quality of life. The industry provides the State with 17,800 jobs directly attributable to its operations and a significant additional number of jobs in support services that are provided to the industry. More than 50 million dollars are paid to state government alone in taxes. The contribution of the industry to the quality of life. however, goes far beyond its role as an employer and taxpayer. The industry has worked very >r closely with this administration to formulate regulatory programs and practices that are protective of the environment while taking account of the unique set of circumstances that exist in West Virginia by virtue of the State's climate, topography and geology. From my discussions with those familiar with the regulatory programs of other states. it is my understanding that a similar situation exists throughout the Appalachian region. The task that confronts EPA in connection with this study is indeed a challenging one. Working as it must under the court?imposed deadlines, EPA is mandated not only to define the practices that are currently being employed by regulatory agencies and the industry to manage these wastes, but also to determine whether there is reason to alter these practices. In performing the study to date, perhaps EPA has already learned that the oil and gas industry and the regulatory programs related to the industry are not uniform either from region to region or from state to state. If there is one lesson I have learned from my many years following the development of national regulatory programs. it is that the different states and regions of the country have special environmental problems. Solutions to those problems frequently do not lend themselves to inclusion within a uniform national program. 7As you have undoubtedly discovered in your review of the regulatory programs in the Appalachian states. the nature of the industry and the nature of the environment'in the region have produced regulatory programs and waste disposal practices that are uniquely suited to the region. In your final deliberations on this issue,-I encourage you to recognize the inherent variabilities that must necessarily exist from state-to state and from region to region. I applaud the conclusion reached in your Report to Congress that there is no need for the imposition of the agency's complete hazardous waste program on oil and gas wastes. This conclusion is particularly important for drilling fluids and produced waters which exist in such volume as to make it very difficult to manage them within the usual hazardous waste regulatory framework. Your conclusion that the imposition of these hazardous waste regulations on the industry would be particularly difficult for small producers and stripper operations is certainly appropriate in the State of West Virginia and throughout the Appalachian region where oil and gas wells are typically owned and operated by small independent producers. Beyond the adverse impact which the hazardous waste regulations would have on the industry. the imposition of such requirements is unnecessary because of the agency's finding that oil and gas industry waste rarely pose significant threats to human health and the environment when managed in accordance with existing regulatory programs. We all share a common interest in preserving the highest possible quality of life for our citizens. This common interest has led the states and the industry to work La? ?mt?h together in the development of regulations and operating practices that are protective of the environment. The best evidence of the success of this effort is EPA's conclusion that when these wastes are managed in accordance with existing regulatory requirements the environment can be protected. I strongly support EPA's conclusion that existing state regulatory programs are adequate to manage oil and gas wastesf The State of West Virginia has been issuing permits for the drilling of oil and gas wells since 1929. Since I 1969, bonds have been required to be posted as a condition of the issuance of drilling permits to assure compliance with permitting and regulatory requirements. Our permitting process involves a review of the well location, casing requirements. construction practices for the drilling site and the drilling pit, and reclamation requirements. In addition to our own requirements, West Virginia has been delegated the federal programs related to NPDES, U16. and hazardous waste. The cornerstone to the regulation of the oil and gas industry in West Virginia was a proposal advanced by me in 1985 which created the West Virginia Department of Energy. As a result of the passage of this legislation, West Virginia now has a consolidated approach to the regulation of all aspects of the oil and gas industry through a single agency. This has allowed us to deal comprehensively with such issues as safety. energy conservation, land use. water quality. waste disposal. reclamation, and permit issuance. One of the most successful programs that has been implemented around the country related to the disposal of wastes from the oil and gas industry is West Virginia's general permit for drilling fluid disposal. That general permit was originally issued in 1985 and was reissued earlier this month for a five year term. This permit grew out of a cooperative effort between the State of West Virginia and EPA and involved extensive input from the industry and citizen representatives. Under the permit, a carefully defined set of procedures is employed to treat a drilling pit after which the pit is sampled to assure compliance with effluent linitations and discharged to vegetated land. In the two and a half years that this permit has been in effect, it has enjoyed enormous success with more than 2,000 pits having been discharged under its terms. While this disposal technique may not be appropriate for application across the nation, it certainly works well in West Virginia given the nature of the waste involved and the disposal options that are provided to us by our climate and geology. Since this permit was originally introducedI it has been refined on a number of occasions and undoubtedly will be in continual state of evolution throughout its existence. Our general permit points out-the need for continuing to allow the states adequate flexibility to develop permits of this type where the specific (my environmental problems confronting an individual state can be adeouately addressed. I strongly support EPA's recommendation that cooperative efforts be undertaken with the states to improve the design implementation and enforcement of existing regulatory programs. Your Report to Congress amply demonstrates that regulations are already in place to deal with any identifiable issues related to the management of wastes generated by the oil and gas industry. What the states need most at this time is EPA's support, both technically and financially, for the implementation of the programs that are already in place. Where refinements to those programs are necessary, states already have the statutory and regulatory authority to make needed changes. The nature of those changes. however, should not be mandated by EPA as part of the establishment of minimum regulatory requirements for the nation. The variations in the nature of the oil and gas industry and in the waste disposal options that are available from state to state are much too complex to lend themselves to such uniform national requirements. EPA's response to this study should be directed towards providing the states with the resources necessary to develop state-specific responses to the waste management practices of the oil and gas industry. Not only is this approach justified by your own Report to Congress,'it is?also consistent with President Reagan's Executive Order of A 4. October 26. 1987. which directed that in situations of this kind federal agencies shall "Refrain to the maximum extent possible, from establishing uniform, national standards for programs and, when possible, defer to the states to establish standards." The State_of West Virginia has always enjoyed a close working relationship with EPA. That has been no more evident than in connection with this study. We have hosted BPA's visits to our state to inspett first-hand our oil and gas wells and their waste management practices; we have also provided EPA with extensiwe data on the nature of our programs and how they are implemented. We.p1edge our continued support to EPA to complete this important task. I thank you for the opportunity to submit these comments and I wish you well in your continuing deliberations over this issue. u-u-u L-n?dLa-d TESTIMONY or M. G. REGARDING To CONGRESS: MANAGEMENT OF NASTEs FROM THE EXPLORATION, 1? DEVELOPMENT AND PRODUCTION OF OIL. NATURAL GAS. AND GEOTHERMAL T, 1933 SAN FRANCISCO. CALIFORNIA Good morning, my name is M. E. Hefferd. I am the State Oil and Gas Supervisor and Chief of the California Division of 011 and Gas. I.a I am here today to reaffirm the comments made by Governor DeukmeJian in his letter of November 10. I987 to Lee Thomas. Administrator of the u. 3. Environmental Protection Agency. Also, I would like to make some additional comments regarding the management of oil, gas. and geothermal wastes. .3. As the Governor indicated in his letter, California is very sensitive to waste management issues and, over the years, has conducted extensive studies and investigations into the issue of these particular wastes. These studies and investigations have led to the deveIOpment of comprehensive statutory mandates, regulations. and methods to manage all wastes that are generated as a result of the exploration, development, or production of crude oil. natural gas. and geothermal energy. I 0w?- . I?u?l l. I. I. I: Testimony of M. a. Hefferd March 1, 1988 Page 2 Depending upon the type and classification of waste. three California state agencies are involved with the management of the waste. These agencies include the Department of Conservation's Division of Oil and Gas, the State Hater Resources Control Board, and the nine Regional Hater Quality Control Boards organized thereunder, and the Department of Health Services. Let me briefly describe the responsibilities of these three agencies as they pertain to the management of oil, gas. and geothermal-related wastes. The California Division of Oil and Gas has had direct responsibility for regulating oil and gas activities in California since 1915. under the California Public Resources Code, the Division is responsible for the permitting. monitoring and enforcement activities concerning all oil and gas wells in California, including wells on federal lands. The Division's Jurisdiction also extends to all wells that are operated for the purpose of injecting fluids or gas for stimulating oil recovery, or for disposing of produced fluids. The Division is mandated by state law to ensure that well operations do not endanger underground and surface waters by the infiltration of any fluids that could pose a threat to water quality. Testi-ony of M. 6. Mefferd March 1, 1988 Page 3 The State and Regional Hater Quality Control Boards are responsible for protecting the waters of the State and preserving all beneficial uses of these waters. The Regional Board's Jurisdiction is extremely broad and covers the discharge of drilling fluids, produced waters, and other oil, gas. and geothermal exploration and production wastes. Depending upon the point of discharge, the Regional Boards's authority is exercised either through the issuance of Haste Discharge Requirements, or National Pollutant Discharge Elimination System (NPDES) permits. All NPDES permits incorporate state water-quality standards that may be more stringent than federal standards. In addition to these permitting requirements. the State Board regulates discharges of nonhazardous. as well as hazardous. wastes to land. Since the early 1970s. the State Department of Health Services, pursuant to the provisions of the California Hazardous Haste Control Law and the regulations promulgated thereunder, has exercised Jurisdiction over hazardous waste management activities conducted in the State. Because the Department's regulations contain toxicity criteria that are much more stringent than EPA's EP toxicity criteria. the State of California regulates a substantially broader universe of wastes as hazardous wastes. In that regard. the Testimony of M. G. Hefferd March 1. l988 Page 4 Department has required oil producers to conduct tests of their various waste streams to verify'that determinations of nonhazardousness made by industry are, in fact, accurate. In the January 4, 1988 Federal Register, EPA solicited public comments on whether produced water injected for enhanced oil recovery is a waste. It is our opinion that produced oil-field water used to enhance the recovery of crude oil is a beneficial use. The fluid is normally injected into oil-producing formations or formations similar to those from which it was originally produced, thereby lessening any adverse impacts. It also provides a substantial benefit to the oil-producing industry and to the State. Currently, in California, approximately 58 percent of the State's total annual oil production, or some 237 million barrels. is produced as the direct result of waterflooding and steamflooding operations that utilize produced water. Hithout the benefit of this produced water, oil production would decline at a substantial rate since the use of fresh water is not a viable alternative because of incompatability and availability problems. Therefore, because the vast majority of oilfield produced water performs a substantial economic benefit to the State, and because the water is currently regulated in a manner that ensures the protection of all useable waters, we believe that an excellent r. vw uni h-u I-nu h-u n-u Lq-d nun hn-a th hunt -- II-I I.- Testimony of H. G. Hefferd March I, 1988 Page 5 case can be made to classify this produced oilfield water as a beneficial fluid rather than a waste. in conclusion. we concur with EPA's recommendation that imposition of the regulation of oil, gas, and geothermal wastes under RCRA is neither necessary nor practical. The State already has adequate authority and expertise to continue the regulation of these wastes in an effective and efficient manner. and the utilization of the present state programs will better serve the public. both from a safety and economic standpoint. Thank you. If you have any questions. 1 will be glad to answer them for you. STATE OF COLORADO OIL AND GAS CONSERVATION COMMISSION DEPARTMENT OF NATURAL RESOURCES SUITE 330 LOGAN TOWER BUILDING WILLIAM R. SMITH 1580 LOGAN STREET ['3ng ?no DENVER. COLORADO mos - ROY HOMER Deputy Dlrocior (303) 588-3531 Governor PRESENTATION TO THE UNITED STATES ENVIRONMENTAL PROTECTION AGENCY on Report to Congress on The Management of Wastes from the Exploration, Development, and Production of Crude Oil, Natural Gas, and Geothermal Energy in Denver, Colorado on February 25, 1988 bY William R. Smith, P.E., Director - Colorado oil and Gas Conservation Commission My name is William R. smith, I am the Director of the Colorado oil and Gas Conservation Commission and appear before you today to tell you h0w the Commission has handled the disposition of crude Oil and natural gas exploration, development and production wastes in the past. I will also cement on the various organizations which have assisted the Commission over the years in these efforts. The bottom line, the job is being done in Colorado, we do not need to divert some of our resources away from the actual regulation efforts to further study the problem. That is an ongoing effort in Colorado and has been since before 1952. We appreciate the contacts by your staff and contractors in their efforts, during this study required by Congress, to determine the state regulations currently in existence to handle these wastes and how they are being administered. At first there was significant misunderstanding in this regard causing the initial draft report to be seriously in error. I am pleased to advise that, with a few minor exceptions, these errors have been corrected and the various tables in Section VII reflect these corrections as does the report on Colorado in Volume 3 (Appendices) of the report to Congress. Thelmain concern I have at the present time is with the Executive Summary specifically in that part of the recommendations section which is headed may consider undertaking cooperative efforts with -states to review and improve des ign, ., implementation and enforcement of existing State and Federal programs to manage oil and gas wastes.? The section goes on to state that may want to explore whether changes in state regulatory reporting requirements would make enforcement easier or more effective.? All of these statements imply that the states are not on top of the issues, there are no interstate organizations currently comparing one states activities to another and there are no industry of public associations working with the states in an effort to constantly upgrade regulatory procedures. I am here today to tell you that there is a constant upgrading of state administration at the individual state level, there are two organizations made up of state regulatory officials and. in Colorado, no less than five industry and public associations working with the Commission on a continuous basis to consider technical as well as operating technics that improve all phases of the industry activities. Additional efforts in this regard by EPA are not necessary, would not be cost effective and would result in the diverting of current resources from getting the job done through inspection and administration to studying how to get the job done. There's an Old adage that certainly applies, "If it ain?t broke don't fix it.? I am sure that the staff working on this study, the contractors and the advisory group responsible for the preparation have probably heard these comments. My concern is that these efforts are not being properly considered or the recommendations should be different. I'will briefly reiterate how the individual states, the interstate organizations. the trade associations and the public associations are doing just exactly what is being recommended and all input and feed-back is from the people actually involved with the ongoing day to day regulation, operation, and coordination of the oil and gas industry in Colorado. The story of the development of Colorado's statutes to protect the environment is well stated in the Volume 3 (Appendices) section of the report and I will not elaborate on that further, other than to state that the Colorado legislature has always been concerned with these issues as reflected in the early laws prohibiting crude oil dumping, requiring proper plugging of oil and gas wells to protect drinking water supplies as early as the 1920's and the comprehensive Oil and Gas Conservation Act of 1951. The rules and regulation promulgated from this act, as well as the act itself, have been constantly upgraded and improved as new technology developed and, equally important, as activity encroached on areas in the state where geological or hydrological conditions warranted more comprehensive attention. There are other areas of concern that are as important, if not more so, than the laws and the rules and regulations and those relate to the resources available and administrative techniques. People and Processes:! I know that you have a full schedule today, so I will not go into the myriad of things that improved Colorado regulation of this - 2 - .r ?u - - vital industry over the last four or five years; but. I would like to briefly touch on two. Inspectors - Although there had been no problem with environmental controls under the existing staff and administration since 1952. in 1983 and 1984 it became apparent that additional attention should be paid by OGCC to drilling activities, disposition of wastes, public safety and report and record keeping that would allow the tracking of oil, gas and produced water from initial encounter to ultimate disposition. The primary concern was with public safety which had not been under the jurisdiction of OGCC until 1984. The first need of course was people, warm bodies. knowledgeable in the various oil and gas activities and regulatory needs. In response to this need the legislature approved five additional engineering positions. These five together with the two that had been added for administering the Underground Injection Control Program (UIC) brought our professional staff to fourteen, including the Director and the Deputy Director who are both professional engineers. When I refer to professional staff, I am specifically speaking about our engineers, geologist and technician not the equally important support staff. With this level of staffing we were able to divide the state into five areas with an engineer responsible for all drilling and production activity in their respective areas. The two engineers responsible for the UIC program are supported by these area engineers who do routine injection well site inspections and witness mechanical integrity tests (MIT) if the UIC staff's workload needs the additional support. All of these engineers as well as their supervisors have attended training seminars in the UIC program and are encouraged to actively participate in the Society of Petroleum Engineers and other similar professional organizations. The second major upgrade of administration was the development of the Colorado Oil and Gas Information Management System COGIMS. With initial program development started in 1933 and accelerated in 1984 a system was designed that allows immediate identification of all pertinent physical and geological information on an individual well, including bonding status; all oil, gas, and water production by lease, including disposition of each; all necessary information on the injection wells including whether they are for enhanced recovery or disposal purposes, injection pressures, MIT results and similar information; and, we are just completing the loop to track produced water from well head through trucker, if trucked. to ultimate disposition. The system is also designed so that the State Board of Land Commissioners can review locations of State mineral ownership, leases, leasing activity, and royalty income. Revenues due the state from severance tax. conservation levy as well as state and federal royalties can be determined and cross-checked through the Conservation Levy which correlates oil and gas prices and gross revenues with production reporting. I would be remiss if I did not mention that the Commission is constantly reviewing the needs to amend, update and review their rules and regulations. This is generally done through a committee consisting of mineral owners, surface owners with no minerals, operators in both exploration and production and other state and federal agencies. The operators are generally represented through association. I am sure each of the interstate organizations and trade Associations will be making a presentation to you that more clearly define their role in assisting in protecting the environment; but, I did want to make a couple of comments from my prospectiVe. Colorado is very active in the Interstate Oil Compact Commission (IOCC), as a matter of fact, we were one of the Charter members and assisted in its original formation. I presently serve as Chairman of the Council of State Regulatory Officials. While all of the committees of IOCC have a specific and significant function, I especially like the Council since this is the forum where the state regulatores sit at a round table and discuss issues, problems and successes in their respective states. Although the agenda is always open, areas of recent discussion include bonding, plugging and abandonment of wells, relations with other state and federal agencies, unitization and enhanced recovery, and other items where each state has an opportunity to seek practical experiences on how other states might handle a particular problem or, equally important, often how they respond to a need in their state that might assist another state with the same problem. It really works. The Underground Injection Practices Council (UIPC), serves a unique function. while many states administered injection fluids for enhanced recovery and disposal many years before the Safe Drinking Water Act was passed by Congress, this was not true in all states and certainly not in some of the other Classes of injection wells, namely Class I, IV and V. The Council provides a forum for the states to interact, much as they do in IOCC, and probably more importantly, bring to EPA recommendations and comments so that the primary states responsibilities will meet the needs of the program without excessive and _unnecessary regulations and control. EPA administers many of the state programs and the interchange of operational problems and techniques is equally important to that segment of the Agency. 0n of the most important functions of UIPC is their training programs. with support and cooperation from EPA they sponsor various training programs and seminars on all phases of injection activity. The-associations in Colorado that we work with most are the Rocky Mountain Oil and Gas Association - RMOGA, Independent Petroleum Association of the Mountain States IPAMS, Denver-Julesburg Petroleum Association - DJPA, Front - 4 - Range Land and Mineral Owners association and The Plains Land and Mineral Owners Association. Each of these organizations have, for Several years, assisted the regulatory community in promoting oil and gas activities in the various states while identifying to the social and environmental needs of the residents of those states. American Petroleum Institute (API) and American Society for Testing Materials (ASTM) are also an important part of the overall team. While these organizations are not on the same interactive level as the associations, the results of their research and investigations are vital to the interests of all involved in oil and gas activities. - In closing let me just say that while the EPA report to Congress is and will be an important document to all of us, it fits in a continuing review and documentation of existing procedures that leads to better administration of the oil and gas industry for the good of all the people of the nation. I am constantly amazed by some entities in Washington who think nothing has been done until they have thrown money at it resulting in a voluminous report. I appreciate the work of EPA and the Congressional concern in this most important matter and, after forty years in the business, would be naive not to realize that in some states and areas regulations may not be on top of all the issues; however, in 1988 this is the exception not the rule and is certainly not true in Colorado. I recommend that Congress apply it's efforts to those areas but not burden the rest of us with additional costs and rhetoric on a job that is currently being well done State of Kansas Kansas Corporation Commission MIKE HAYDEN mm KEITH I MEDLEY mum RICH KOWALEWBKI WE Founh Fieov. Deal-u me Of?ce MAMEE WRIGHT comm pa 9?3. JUDITH MOONNEU. EXECHTIVE DIRECTOR Tops?. As 56612.15.? FRANK A CLEO. .IH, GENEFIAL CODNSEL I March 14, 1988 1' Mr. Robert Hall, Docket Clerk Office of Solid Waste 401 M. Street SW Washington, DC 20460 RE: Docket No. Dear Mr. Hall: I have purposely reserved providing comments until now in order to address what I consider to be general critical issues as EPA goes into the phase of the Productions Waste Study where the EPA administrator must make a regulatory determination by June 1988. As a member of the EPA Production Waste Study Workgroup representing Kansas, I look forward to assisting the Administrator in arriving at the correct determination. one which will protect the environment and the health of humans from pollution or effects of oil field related wastes while still allowing the petroleum industry to explore for and produce oil and gas without unnecessary environmental or water protection requirements. The EPA Office of Solid Waste has arrived at many correct conclusions. or at least ones which portray the status of state and federal oil and gas regulatory programs much more accurately than the scenarios offered in earlier working drafts reviewed by the workgroup. In preparing this set of brief comments. I have reviewed those submitted to EPA by API and various oil producing states either in writing or during hearing testimony. I have also read statements by various environmental groups which were disappointed in the conclusions: in that they understate the need for full or modified RCRA Subtitle for everything and the recommendations did not go far enough. The Report to Congress is now history except for possible Congressional reaction and the EPA Administrator's determination, therefore, it would seem counter productive to flog the accuracy of the Report, even though some technical errors and misrepresentations of 'how it really is" still exist. The report is a vast improvement over the first set of drafts. Several observations appears appropriate. (1) On page 43 of the Executive Summary. EPA states 'Damages may occur in some instances even where wastes are . Mr. Robert Hall, Docket Clerk March 28. 1988 Page 2 managed in accordance with current applicable state and federal requirements.? on page 49, EPA concludes 'Implemsntation of existing state and federal requirements is a central issue in formulating recommendations in response to Section 8002m.? I agree the extent to which the state or federal regulations are implemented and enforced must be one of the key factors in forming recommendations to Congress. After a thorough review of appropriate state and federal regulations for NPDES, UIC and for oil field pits (state), I am absolutely convinced the regulatory ingredients exist now in most states for adequate environmental and water resource protection. The EPA report to Congress agrees with this assessment and recognizes the efforts of states to promulgate new regulations in those areas where enhanced oilfield waste management requirements are needed. Even reasonable evidence for a set of new federal RCRA Subpart or is absent even though EPA. throughout its Report to Congress, unnecessarily qualifies many statements particularly where risk analysis is discussed. State oil and gas regulatory agencies have pointed out to EPA on several occasions throughout the development of the report that damages from oil or gas operations resulted from violations of existing regulations or developed where past state regulatory requirements and/or enforcement levels were inadequate. The fact remains that even with more stringent UIC regulations. all-inclusive requirements for sealing of reserve pits, severe administrative penalties and enforced federal SPCC regulations, damages and violations will continue to infrequently occur. The ultimate objective in compliance is to develop industry-regulatory agency communication to the point where early detection and voluntary resolution of small problems (leaks) take place and events are reported in a timely manner. Any system based on the strength and performance of Mr. Robert Hall. Docket Clerk March 28, 1988 Page 3 (2) materials will occasionally fail, but timely repsonse, not new regulations, is the secret to averting a damaging occurrence. After all. even Toyotas and Mercedes-Benz occasionally fail to run. Compliance is achieved moat effectively by well designed field surveilance programs and, more particularly. by a strong field presence. Enforcement actions and fines, while viewed by EPA, Congress environmental groups and some states as the epitome of regulatory success, really represent failure of regulators and industry alike to recognize their respective responsibilities. The EPA Administrator should be looking more toward how to assist states in funding existing federally mandated environmental or water protection regulatory programs rather than writing new federal regulations, which have to be implemented without adequate funding. I base this statement on the knowledge that EPA has asked for the FY 1987 budget levels for water programs without even including 1987 add-one by Congress UIC). The assemblage, evaluation and presentation of oil and gas damage cases by EPA contractors caused the most concern to state members on the Oil and Gas Workgroup, state oil and gas regulatory agencies and to industry reviewers. The quality and study ethic of this effort did not achieve the same level of objectivity, quality of interpretation or dependency upon proven research methods that was displayed in the deve10pment of other parts of the Report to Congress. While it is true, no two persons or entities would agree absolutely on the degree of economic impact or the level of risk associated with past or present release of production waste each scenario, however. did have specific parameters and a basis by which numbers were developed. The damage case assessment could not boast a scientific method of development. We find it interesting in light of this question- able study that EPA has elected to use the same EPA mum a Mr. Robert Hall, Docket Clerk March 28, 1988 Page 4 contractors who developed the fatally flawed damage case study, to develop the information and background material for the Administrator to make the June 1988 regulatory determination. As an example of our concern, Volume 3 of the Report to Congress still contained KS-OS even though the Kansas Corporation Commission provided sufficient documentation to demonstrate the pollution to the Koelling well was not from a reserve pit. Even though the report has gone to Congress. we are hereby requesting written acknowledgement from EPA that inclusion of this damage case as a reserve pit problem was inappropriate. I could have made this a separate request. but elected to include it as a damage case issue because it displayed a certain unwillingness on the part of EPA's contractors and possibly EPA to accept states' documentation as evidence. We recommend the EPA Administrator be very judicious in the application in the use of damage case information in arriving at a regulatory determination. We compliment EPA on its efforts to provide open discussion of the elements of the Report to Congress as it progressed through a series of drafts. We are optimistic the EPA administrator will see that state oil and gas environmental protection programs are generally effective and whatever shortcomings exist may be resolved by financial support for existing regulatory programs but certainly not by a new set of federal regulations. Very sincerely yours, ang?fq ,4 f. rvf\?L; . I William R. Bryson Intergovernmental Coordinator cc: Governor George A. Sinner w. Timothy Dowd Keith Henley Jerry Mullican -. .wuni-1m of Httirnl Insourccs Office of Con-orvation ch. Inpor: to untitled Hanngelnut at Hilton tron th- lxpiorltion, and Production of Crud: Oil. Natural 60?. and lasts! Dullal. 101.: March 8. 1988 thank you for the opportunity to comment today on the subject Report to Congress on behalf of the State of Louisiana. Department of Natural Resources, Office of Conservation. the Office of Conservation is the Louisiana state agency statutorily authorised to administer our State's oil and gas regulatory programs. 1 want to commend IPA on being able to accomplish such a nonunentsl task in such a short period of time. You have commented in the executive summary that. l) ?The oil and gas industry is extremely large and varied?; and 2) recognizes the difficulty of analyzing changing State requirements in relation to the regional variations of the industry." However, the regulation of oilfield waste must continue to evolve to a point where the environment is protacted and the public health and safety of citizens can be insured. Louisiana Oilfield Waste Regulation; The State of Louisiana is proud to say that we are on the cutting edge of oilfield waste regulation in the United States. Since 1950. rules governing oilfield waste have been promulgated and amended to produce what many oil and gas operators as well as other State and Federal agencies have called the most stringent oilfield environmental regulations in our country. is you are aware. Statewide Order 29-3 contains strict guidelines for the storage, transportation. treatment. disposal and reuse of oilfield waste in Louisiana. Therefore. many of the recouendationa and ideas expressed in the Report are already included in the 29-3 regulations. However, we also feel that 29-! can be improved to provide a greater degree of environmental protection. I am pleased to submit another copy of Louisiana's Statewide Order No. 29-! (Section XV) into the Record today and to clarify the Record. at EPA remember; Paragraph 2 of this Order deals with onsite disposal and Paragraph 13 of this Order deals with offsitg disposal of oilfield waste. Comments on Repgrt to Cungress The Louisiana Office of Conservation offers the following specific comments on the EPA Report to Congress: 1. Conservation agrees with the 'scope of the exemption? as proposed in the report. Our Statewide Order No. 29-! identifies specific wastes which are considered "nonhazardoue oilfield waste." We agree with the term "other wastes associated? and the clarification of "waste materials intrinsically derived from primary field operations." 2. As is required in Statewide Order No. 29-3, Conservation suggests that EPA stress the concept of waste segregation in order to separate potentially hazardous materials from those that meet the definition of "oilfield waste." 3. Conservation agrees that oilfield waste, when managed properly, rarely poses a significant threat to human health and the environment through surface and groundwater contamination. Almost all the da use cases cited for Louisiana include past practices which are not allowed by regulation at this time. We do not deny the fact that there exists problems which are the result .of such past practices. Heat oil companies are making diligent efforts to educate their employees concerning new environmental regulations and procedures for managing wastes. - 1 6. Conservation agrees with the Report in that the annular injection of reserve pit fluids and produced water needs further study in order to identify problems and provide for better operation of such disposal activities. 5. The Offics' of Conservation shares concerns for the potential of unplugged or improperly plugged abandoned wells to cause environmental damage. Our Office is attempting to identify and address these walls as time. money, and manpower permits. 6. It is the opinion of the Office of Conservation that produced fluids injected for the purpose of enhanced oil recovery is not waste disposal. If such fluids were not utilized for such, an operator would be required to drill water wells to provide the needed fluids. 7. Conservation agrees with the idea of using Subtitle and other Federal and State authorities in exploring a means of implementing any necessary additional controls on oil and gas wastes. New authority is not needed. 8. Conservation also agrees with the recommendation for additional work, in cooperation with the States, to explore the oilfield waste issue and to develop improvements in the design. implementation and enforcement of State programs. The Office of Conservation should be the lead agency in Louisiana in any such endeavor. as it is Conservation that has the regulatory and technical expertise in these areas. 9. In regard to the additional EPA work in cooperation with the States. involvement should be in the form of financial assistance to the States through the grants process. In taking the lead, the States should- work through existing and established professional interstate commissions rather then setting up any new organizations. Examples of such existing commissions would be the Interstate Oil Compact Commission (IOCC). the Underground Injection Practices Council (UIPC), or the UIPC Research Foundation. 10. Conservation agrees that industry should be encouraged to explore the potential use of waste minimisation, recycling, waste treatment, innovative technologies. and material substitution as long-term improvements in the management of oil and gas wastes. 11. As a final comment, I would like to encourage EPA to strongly press for documentation of enforcement of State oil and gas waste regulatory programs. In doing so, such programs may gain local support for the needed monies. personnel, and incentives for ensuring adequate enforcement of such regulations. Conclusion The Office of Conservation supports the efforts of EPA in its study of oil and gas wastes. As has been said, we feel the Louisiana program is at the forefront in this area of environmental protection. However, regulations are only as good as the enforcement effort to insure proper implementation. We do ask EPA to stress improvement of oil and gas regulatory programs on the State level. He offer to you our assistance and expertise in further addressing these issues and in developing improvements to regulations which may be proposed. Thank you for your time and consideration of these comments. - 2 - COMMENTS NITH RESPECT TO EPA REPORT ON OIL AND GAS NASTE Nebraska The Nebraska Oil and Gas Conservation Commission is the state agency responsible for the regulation of the drilling and production of oil and gas in Nebraska. The Commission agrees with U.S. Environmental Protection Agency (EPA) findings that there is no need to classify oil and gas drilling and production wastes as hazardous and bring the wastes under federal regulations. A hazardous classification of oil and gas related wastes is unnecessary and would impose an unbearable burden on an industry that is very adequately regulated by the various states. The Commission does not agree that EPA should continue to study the oil and gas waste issue and make recommendations for changes in state regulations unless such a study is conducted as a mutual effort with the states through the Interstate Oil Compact Commission (IOCC) and the Underground Injection Practices Council (UIPC). A separate EPA study would only be a duplication of ongoing state efforts and would truly be a waste. State regulations are constantly undergoing review and change. As an example. the Nebraska Rules and Regulations have been revised 20 times since 1960. The majority of the revisions were to address environmental issues. The IOCC and the UIPC provide a forum for state personnel to compare and distuss problems and solutions. This forum also provides an excellent inter- face with the various federal agencies. It should also be recognized that each state encounters different problems in regulating it's oil and gas operations and one solution or recommendation is not desirable for all states. The UIC Program. mandated under the Federal Safe Drinking Hater Act. recognizes these many and vast differences and Congress made it very clear that the intent of the Act was for the states to run their program in their respective states subject to meeting certain minimum requirements. Since the u1c Program handles a large part of the oil and gas wastes, there is no reason for change. In addition, there are a number of industry associations that keep a watch on the state regulatory agencies and have proven to be very helpful when changes are required. In the Commission supports the EPA findings that no further regula- tion of oil and gas drilling and production wastes is necessary but believe that an EPA study to recommend changes in state regulations is not warranted. .. or; H. STATE OF NEVADA mcmulo L. IEYIUIN Gunner Director DEPARTMENT OF MINERALS 400 w. Street. Salt. 106 Canon Cltv. Nevada .9110 (102] 885-505!) March 16, 1988 Mr. William Richardson Public Participation Office Office of Solid Waste, Wl-l 565 U.S. Environmental Protection Agency 401 Street, S.W. Washington, D.C. 20466 Subject: R.C.R.A. Docket No. Please find enclosed Resolution #1?88, which was passed by the Nevada Commission on Mineral Resources at their March 7. 1988, meeting. This resolution pertains to the U.S. Environmental Protection Agency Report of December 29. 1987. which concluded that current state and federal regulations are adequate for the underground injection of oil and gas wastes, waste discharges into the surface waters, and the disposal of drilling mud and other wastes associated with oil and gas production. . Please see that this resolution is entered into the official hearing record on the above subject matter. ?y?ac. Enclosure an? ?do; RICHARD H. BRYAN Gum-er STATE OF NEVADA DEPARTMENT OF MINERALS 400 W. Street. Suite 106 Canon City. Nuldl 89710 (702) 885-5050 #1-88 RESOLUTION BY THE NEVADA COMMISSION ON MINERAL RESOURCES March 7, 1958 INSOMUCH as current state and federal regulations, including the Federal Clean Water Act. for the underground injection of oil and gas wastes, waste discharges into the surface waters, and the disposal of drilling mud and other wastes associated with oil and gas production are adequate, the Nevada Commission on Mineral Resources concurs with the conclusions of the U.S. Environmental Protection Agency report of December 29, 1987, and strongly urges that no additional state or federal regulations are necessary. . 2" Gibson, Jr. Chairman -.. .. - 0.11! RICHARD L. BEYIURN Dir-cm #1 h?A h- i?q?e STATE OF NEW MEXICO PUBLIC COMMENTS ON REPORT TO Presented by David G. Boyer New Mexico Oil Conservation Division at EPA Public Hearing Denver - February 25, 1988 New Mexico welcomes the opportunity to comment on the final report. We reviewed earlier drafts of the report and the final document is much improved. We are completing written comments for submission by the deadline. Although we do not necessarily agree with all the information presented In the document, in general, we support the final report and its conclusions and recommendations. New Mexico-has dealt with these disposal issues for over 50 years. in early years of development large volumes were disposed of in pits, and in some areas fresh water has been seriously and irreversibly damaged. For over 20 years New Mexico has had a program to protect fresh water from large volume waste disposal and this program is continually being improved. The Oil Conservation Division has for 11 years had an Environmental Bureau that has equal status with the traditional engineering and geological staff. SCOPE OF EXEMPTIONS: EPA requested cements on the scope of the exemption. We agree with the listing of "Exempt" wastes in Table I presented on page 9 of the Executive Summary. We believe that wastes from gas plants, especially, should be included as exempt since the plants are an extension of field processing activities. EPA should clarify that spills from pipelines means spills from refined transportation pipelines and not spills from gathering lines. We also be that most wastes listed as "Non-exempt" should be considered "Exempt". ?These are wastes. from primary field operations such as waste iron sponge, glycol, filters, etc. We also believe that produced waters injected for enhanced oil recovery are not "wastes" and should not be treated as such. These activities are already covered by the Underground Injection Control program under the Safe Drinking Water Act. COMMENTS ON REPORT CONCLUSIONS: We strongly agree with conclusions that when managed in accordance with existing regulations. exempted wastes rarely pose significant threats to human health and the environment. We also agree that any regulation under Subtitle (hazardous waste) of RCRA would have substantial effect on the US (and New Mexico) economy and such regulation is unnecessary. "Report to Congress: Management of Wastes from the Exploration, Develop- ment, and Production ?of Crude Oil. Natural Gas. and Geothermal Energy", December, 1987. .. ON RICMINDATIONI: New Mexico belieVes our existing State regulatory structure ls capable of adequately protecting human health and the environment. This includes the - ability to take additional measures. when necessary, to enhance existing controls or adopt additional controls. Therefore, we would oppose any efferts to institute Subtitle (solid waste) controls on these wastes. On the other hand, New Mexico supports undertaking cooperative. non- regulatory efforts to improve our existing programs, especially In the area of technical assistance. if EPA decides State programs need improvement in implemention and enforcement, it should provide technical and ?nancial assistance rather than saddilng the States (and industry) with additional Federal requirements that will likely cost more and be less effective than would improvement of existing State programs. industry is encouraged to explore alternatives to traditional waste disposal methods. This includes waste separation, and minimization. The States, with their knowledge of local conditions, can best provide the regulatory flexibility to allow industry to explore these methods. New Mexico has. significant low-temperature geothermal resources. Dis- charges. aseeciatoda' with these are? antroiied? under several state regulatory progran. We completely concur with: an conclusions- of? this section and with the recommendation. that m. Fulani. regulation. under either Subtitle or of RCRA- is warranted. .. ?7 Mach 7. 1988 Inlfill IF RH. Ml The moor-able Lee Thorns. Administrator U.S. Ehvimtal Protectim Agency 401 Street. 9N . . Washington. D.C. 20460 Dear Mr. Theme: The U.S. Protection Agency recently suhnitted to the Congress its reports entitled ?Report to Manageterlt of Wastes from the EbcploratiOn. Developmmt. and Production of Crude Oil. Mutual Gas. and Geothermal Energy.? morioDeparumtofNatural Resourcesluseaminedthis reportandisin general agreement with its caclusions and recumendatims. ODNR agrees with EPA that the regulation of all exam: wastes under Rm Subtitle i unnecessary and inpractical. The believes tint Ohio currently bass somdregulatoryprograh. ?xturechanges inthisprogramarebest accom- plished on the state level where regulators are met aware of local drilling and operation practices. geologic conditions and potential economic inpacts which may be peculiar to Ohio. The existing program has sufficient authority and flexi- bility to remand to additional areas of concern as they are identified. Over the past several years. Ohio has initiated many new regulations regarding the nanaga'rent of oilfield wastes. Currently. Ohio Ins an effective and carpi-e? hensive program in place regarding waste disposal. own is continuing to identify specific areas of cancern and is cmtimally inproving its efforts to adequately regulate oilfield wastes. Please refer to try letter to you of Decoder 1. 1987. outlining the existing program in Ohio and our proposed regula? tory oranges. ODNR has enjoyed an accellent working relaticnship with the U.S. EPA and will contimie to corporate to improve the design and hmleuematicn of Ohio's program. Stand ya: have any questions. please do not hesitate to contact Mr. J. Michael Biddison. Chief of the Divisim of Oil and as. at (616) 265-6893. JJS sly cc: The Hmorahle Richard F. Celeste. Governor. State of Ohio The Hmorable George A. Sirmer. Govermr. State of North Dakota Times L. Sherman. Deputy Director. Ohio Department of Natural Resources J. Michael Biddisonn Chief. Division of Ohio Oil and Gas. com w. Timothy Dead. Ebnecutive Director. Interstate 011 (Impact (:mmissim J. Kearney mansion. Burke. Haber a Derick Terry Planing. Executive Director. Ohio Petroleum Gaston Kirk Jordan. mecutive Vice President. Ohio Oil and Gas Association Robin Turner. Beecutive Director. Ohio Petroleun Producers Association Buddy Parks. President. thlaciated Oil and Gas Producers Association Eddy Biehl. President. Southeastern Ohio Oil and Gas Associatim David M. Flowery. Robinson and Mime Ernie Cede. Associate Director. BP Marisa. 1m. Ril'hilrd Volt-5w. Gnu-rrmr A ?5 4? OF LIOCC) I H. A DEPARIMENT ?gmroiglAl RESOURCES Harrisburg. 17120 Deputy Secretary for Environmental Protection Mr. Jeffrey Denit . 'Acting Director 0.5. EPA office of Solid Waste 401 Street, S.W. Washington, D.C. 20460 Dear Mr. Denit: These comments and recommendations are being offered on behalf of the Department of Environmental Resources as written testimony on the "Report to Congress: Management of Wastes from the Exploration, Development and Production of Crude Oil, Natural Gas, and Geothermal prepared by EPA in response to Section 8002(m) of the Resource Conservation and Recovery Act, 42U.S.C. 6982(m). . I First. I would like to provide you with an update on the development of new regulations for oil and gas wells in PennsyIVania. The proposed regulations are scheduled to be presented to the Environmental Quality Board for proposed rulemaking on March 15. 1988. The scope of these regulations include: casing and cementing, plugging and mechanical integrity standards for the protection of fresh ground water: standards for preventing pollution of surface and groundwater from the storage and disposal of wastes; and standards for water supply replacement and restoration. We will be able to provide you with a copy of these proposed regulations after they have been accepted for proposed rulemaking. As pointed out in the report, 34 of the 57 technical positions in our oil and gas program are dedicated for field inspections and enforcement. Our current budget plans for next fiscal year includes an increase in the staffing for this program. Next. I would like to offer some comments and recommendations on the "Report to Congress". In regards to the recommendations, we concur with the EPA conclusion that imposition of full unmodified RCRA, Subtitle regulations for all exempt oil and gas wastes is not necessary. Furthermore, we concur with the that waste segregation, minimization, recycling and reuse be incorporated into all and gas activities where ever possible. This is especially important where certain well servicing and specialty fluids, or spills and wastes associated with the operation and maintenance of the drilling equipment, are produced. ?l The recommendations also state that it is EPA's belief that further revisions under other federal authority are desirable. We also concur with this conclusion. It is especially necessary for the oil and gas extraction point source category (40CFR 435] under the clean Water Act and the underground injection control program under the safe Drinking Water Act. Our current understanding is that the evaluation and updating of the onshore and stripper point source category regulations has been put on hold. The revisions to existing federal authority contemplated by this recommendation need to include reactivating the reevaluation of the onshore and stripper category to take into account the oil and gas activities in the Appalachian basin. In addition, the EPA regional UIC program and policies should be developed in conjunction with the state so that there are not major conflicts in areas common to both the State and Federal program. The second recommendation in the report is that EPA may consider undertaking cooperative efforts with the various states to review and improve the design, implementation and enforcement of the state program. We recommend that this recommendation be revised to state that upon request from a state, EPA will undertake cooperative efforts with the state in providing program evaluations, technical assistance, technology transfers and especially research funding for solving waste management problems specific to the individual states. In the process of preparing this report to Congress, EPA has become one of the central sources of information on oil and gas wastes. A program needs to be established where a state can utilize this information in developing its regulatory program and also use the information to tailor the various waste management practices and the various federal programs under the Clean Water Act and Safe Drinking Water Act to address the specific needs of the state. In conclusion, we appreciate the repeated opportunity to share our comments and recommendations with you, and also would like to acknowledge EPA's receptiveness to our previous comments and the willingness to incorporate these comments and recommendations into the reports. If you have any further questions, please feel free to contact Mr. James Erb. of my staff, at 711-783-9645. Sincerely, McClellan Docket Clerk, Office of Solid Waste (WH595) (3) ?ecretary (Log 2/16/88) ?Herritt R. Giliua . Rhoada . Casey . Dallas . Flannery . Derkiea G. R. Mark M. McClellan Deputy Secretary Environmental Protection T. Dowd Arlene Shulnan RB 25 Reading Illa Testimony of Railroad Commissioner Kent R. Hance Before the Environmental Protection Agency on the Oil and Gas Report to Congress Dallas, Texas March 8. 1988 My name is Kent Hence. I am a Commissioner with the Railroad Commission of Texas. I appreciate the opportunity to present my testimony at this public hearing on Management of Wastes from the Exploration, Development and Production of Crude Oil and Natural Gas. The Railroad Commission supports conclusion in the Report to Congress that "full?scale federal regulation of wastes from the drilling and production of oil and gas as hazardous wastes is not necessary" and that ?these wastes generally appear to be adequately regulated at this time." The Railroad Commission regulates the drilling, completion and plugging of all oil and gas wells in Texas. The Commission also regulates injection wells used either for enhanced recovery of oil and gas or for disposal of oil and gas wastes, pits used for storage Av map": a. or disposal of oil and gas wastes and all other methods used for disposal of oil and gas wastes. One of our regulatory functions is to protect water in the State of Texas from pollution that might result from these activities. Due to our regulatory responsibilities for the State of Texas. we are keenly interested in the EPA's report to Congress and extremely motivated to insure that pending regulatory determination concerning oil and gas wastes is valid. - - - In its report to Congress, the EPA admitted that "all aspects of explorationI development. and production vary markedly from region to region and from state to state. Hell depths range from as little as 30 feet to over 30,000 feet. has been producing oil for 128 years; Alaska for only 15 years. Maryland has approximately 14 producing wells: Texas has over 269.000 and Completed another 25,721 in 1985 alone. Production from a single well can vary from a high of about 11,500 barrels per day to less than 10 barrels." These variations make it difficult for a federal agency to fully understand and fairly regulate the oil and gas industry as a whole. The state regulatory agencies are involved at a "grass-roots" level and can more appropriately concentrate on region-specific issues. Historically, wastes from the oil and gas industry have not been subject to the Resource Conservation and Recovery Act (RCRA) regulation as "hazardous wastes." instead the regulatory authority has been at the State level and at the Federal level, under the Federal Clean Hater Act and the Federal Safe Drinking Water Act. EPA noted in its report to Congress that state programs controlling the management of high-volume wastes have improved significantly over the past decade and. especially over the last 2 or 3 years, have reflected the national trend of increased concern about environmental protection. :ee: The Railroad Commission believes it has effective programs for protecting the state's water resources from pollution that might result from oil and gas drilling and production activities. The Commission's water protection programs are based on sound, state-of- the-art rules, which are actively enforced. Following a 1986 evaluation of our state UIC Program, EPA stated, ?We were impressed by the sophistication of your program. . .It is obvious that you have developed a program that is both technically sound and efficiently managed.? The Railroad Commission's water protection program has a long history. The precursors of the Commission?s current water protection rules date back to 1919, when the Commission adopted rules requiring fresh water to be protected in drilling and plugging operations. In subsequent years, the commission adopted increasingly stringent and more comprehensive water protection rules. For example. in the mid 1930's, the Commission strengthened its plugging requirements and also began regulating the use of injectiOn wells. In 1969, the Commission issued its "No-Pit Order," which required Commission approval for the use of surface pits for the storage 0r disposal of salt water. Since 1980, when Congress amended RCRA to exempt oil and gas wastes. the Commission has amended its existing water protection rules and adopted rules to enhance its water protection program. p? Effective April 1. 1982. the Commission amended its rules governing disposal wells and fluid injection wells and adopted a new rule governing underground hydrocarbon storage. Following this rulemaking. the Commission?s Class II injection well program was approved by EPA on April 23. 1932. Under its rules, the commission tracts the operation of over 53.000 permitted injection/disposal wells. Amendments to the Commission's rules concerning casing. cementing, drilling, completion and plugging were adopted in 1982 and 1933. These rules now reflect state-of-the-art methods for protecting all usable quality water zones. The plugging rule haw requires that all wells not associated with an active enhanced recovery project be covered by a plugging bond or letter of credit unless plugged within a year after becoming inactive. Effective May 1. 1984, the Commission amended its Statewide Rule B. As amended. Rule 8 requires that the disposal of Oil and gas wastes store or dispose of oil and gas wastes must either be authorized by the rule or permitted. It also essentially prohibits the use of unlined saltwater pits, other than emergency saltwater storage pits, in most parts of Texas. . . - a?n. The Railroad Commission is committed to the continuing review and improvement of its water protection programs. For example, one of the issues of concern expressed by EPA in the Report to Congress is the potential for pollution from discharges into surface waters. The Commission is reviewing these discharges and is developing a National Pollutant Discharge Elimination System (NPDES) permitting program to address them. The Commission has adopted a new rule to enable it to administer the NPDES program for oil and gas discharges in the State of Texas. The rule will become effective upon approval of our NPDES program by EPA under the Clean Water Act. we feel that our rules are exemplary, we also feel that our enforcement program is effective. It is the intent of the Commission that every effort be made to prevent and abate pollution. To reach this objective, the Commission uses various enforcement mechanisms, including pipeline severances, zero allowables, seals and administrative penalties of up to $10,000 per day for violations of statutes and rules pertaining to pollution prevention. The Railroad Commission has also developed a sophisticated automatic data processing system to record and tract compliance. Out of 254 counties in the state, 217 had oil and/or gas production in 1986. The Railroad Commission currently has a total of 102 field inspectors located at ten district offices across the state. The activities of the district offices are coordinated by the Commission?s Field Operations Section. vw. Iva?- . The district inspectors logged over 4 million miles in fiscal year 1957 for a total of 176,142 on-site inspections. As the result of these inspections, the Commission issued 1904 severances, "zeroed" the allowable of 5705 wells and placed 977 seals. In only 388 incidents did the Commission ultimately have to take formal legal action. A total of $794,000 in administrative penalties were assessed in calendar year 1987. These efforts illustrate that new federal programs are not necessary to address the concerns that EPA has raised, such as the concerns about discharges to surface waters and unplugged or improperly plugged abandoned wells. Existing federal and state regulatory programs are the appropriate vehicle for addressing these concerns. The cost of additional federal regulatiOn aimed at the oil and gas industry will wipe out incentive for exploration and production of this valuable natural resource. The loss of incentive could reduce domestic production to a point where the U.S. could be 70% dependent on foreign markets. In other words, the U.S. wOuld be vulnerable. EPA and Congress must carefully consider the effect of increased costs of any unwarranted additional federal regulation on domestic production, employment, national security, balance of trade, and federal, state and local revenues. when oil prices dropped by 45 percent in 1986. domestic production declined by 800,000 barrels per day. The nation lost 150,000 jobs directly related, and jobs indirectly related to the oil and gas industry. Federal. state and local revenues dropped substantially. These negative impacts Here disproportionately severe in areas dependent on oil and gas production. Although U.S. production declined, U.S. consumption increased. This resulted in a need to increase oil imports which has impacted our balance of trade. federal budget and national security. In summary. state regulatory bodies. such as the Texas Railroad Commission, are providing regulation oi oil and gas wastes in a manner which is protective of the environment. Regulation from a state level provides the regional expertise which is mandatory in such a diversified industry. Additional federal regulation of these wastes is unnecessary and would additionally hurt an already burdened sector of our nation's economy. Testimony of Jerry Mullican Director of Underground Injection Control Railroad Commission of Texas Before the Environnental Protection Agency on the Oil and Gas Report to Congress Dallas. Texas March 8, 1988 The Railroad Commission cooperated with the EPA and its contractors from the beginning of the Study when sampling started in the Sunner of 1986. In addition to meeting on numerous occasions with EPA contractors, we reviewed about 5.000 pages of drafts. most severely flawed. and furnished the EPA with over 300 pages of formal comnents on the drafts in an effort to ensure a factual and impartial report. Considering the time constraints and the vast scope of the Study, the EPA should he commended on pulling the Report together. The EPA is on the right track with many of its major conclusions and recommendations. However. the uncertainty of the final outcome of the EPA's regulatory determination. due in June. is amplified because of contradictions in the text, and biased and unsubstantiated statements that unjustly portray only the negative side of oil and gas management practices and regulatory programs. The disturbing uncertainty is further compounded by what the EPA has determined to be exempt and what is non-exempt waste. The EPA continues to define the scope of the exemption too narrowly. The Railroad Commission has cammented over and over again that all wastes generated in connection with primary field operations are covered by the congressional exemption. 'In Texas. the wastes exempt from regulation under the state hazardous waste managenent program include all wastes generated in connection with primary field operations. including various wastes the EPA has tentatively identified as nonexempt. such as rigwash. solvents. de-emulsifier, and lube oils. The EPA indicates that these wastes should be segregated from the exempt wastes, to the extent possible, or it all becomes non-exempt. and possibly subject to hazardous waste regulations or other requirements. As indicated in the Report, some of the wastes that EPA has tentatively identified as nonexempt are possibly more toxic than other oil and gas wastes, but they are generated in low volumes. Frequently they are recycled by being sent to the refinery along with crude oil. The small quantities actually disposed of. which are frequently disposed of in conjunction with larger volume, low toxicity oil and gas wastes. do not require regulation under Subtitle because they do not pose a threat to human health or the environment when disposed of in accordance with current state regulations. If you wonder why the concern about the definition of the scope of the exemption. let me quote from one of the most important Conclusions: ?Regulation of all exempt wastes under full. unmodified RCRA Subtitle appears unnecessary and impractical at this time." The text following this highlighted conclusion states that "Nevertheless. elements of the Subtitle regulatory program may be appropriate in select circumstances.?I This means that even the produced waters and drilling fluids that have not been co-mingled with "non-exempt" waste still face additional federal regulations although not full, unmodified hazardous waste regulations. If so. what is the cost? EPA doesn't know. The EPA field sampling showed current waste management practices. e. g. rig wash in reserve pit, and de?emulsifiers in produced water - yet the analyses don't show hazardous characteristics. That is under current practices. In the Recommendations. EPA states that 'Use of Subtitle and Other Federal Authorities Should be Explored as a Means for Implementing Any Necessary Additional Controls on Oil and Gas Hastes" Again, in the text following this highlighted recommendation. EPA states that it is desirable to review the future use of Subtitle (pits), Clean Hater Act (NPDES), Safe Drinking Hater Act (Ulc), authorities for improved management of both exempt and non-exempt wastes. Again, the uncertainty of future EPA recommendations and actions. If exempt. some additional requirements; if non-exempt. even more requirements. Two examples of unsubstantiated statements and conclusions are: - The assertion that unplugged and abandoned wells pose a significant hazard, and - The conclusion that significant damage has occurred in the Gulf Coast where NPDES permits have not been issued. Abandoned Hells. There is not enough substantiated information in the body of the Report to warrant this conclusion. First of all, even if abandoned wells constitute a threat to the environment, they are not a waste management activity or practice. Therefore, they have no place in the Report to Congress on the Management of Oil and Gas Haste. Second. the water that is in contact with the steel and concrete in an abandoned well is not produced water. but is conate water. The States, and some Federal agencies such as the 001 are the best authorities regarding any assertion relating to abandoned wells and should be given the explicit opportunity to express their views on this subject. because they have considerable experience in coping with this issue. If EPA feels that abandoned wells are of National concern. then more detailed analysis is needed and should be then furnished to Congress in a separate Report to Congress. Regarding the non-issuance of NPDES permits on the Gulf Coast. this implies that discharges are not regulated. Permits for such discharges are required by the State. Permits for discharges that were determined to pose a threat to the environment have been revoked by the RRC. Other examples of unsubstantiated and biased statements and conclusions relate to the damage cases. 1. m- . ice?n, I Four of the seven Texas damage cases involved violations of current regulations: and TX-29 In each case. a reserve pit was breached and mud was allowed to flow to surface waters. A total of $11,000 in administrative penalties was assessed. Yankee Canyon Field. Administrative penalties in the amount of 560,000 have been assessed for violations relating to flowline. wellhead, and tank battery leaks and unplugged wells. (The Report incorrectly states that no violation was involved.) Discharges to Petronilla Creek. zone revoked in 1986. Permits above tidally influenced In the other three Texas damage cases, EPA drew general conclusions without a thorough study of the multifaceted problems involved. These damage cases contained biased and unsubstantiated statements of possible harm. EPA ignored infonmation provided by RRC, including scientific studies, indicating other contributing factors. TX-55 TX?ll EPA states that there are variances between state programs and that they should be examined to try to achieve uniformity. Paw studies show that high Ca/Hg ratios in produced waters are lethal to the Common Atlantic Croaker. EPA did not consider mitigating effect of rapid mixing in bay waters. FAH study found PAH aromatic hydrocarbon) contamination in Tabbs Bay sediments. Some sediments sampled within 100 yards of tidal discharge points. EPA did not consider numerous industrial discharges upstream (Houston Ship Channel). Lumped together complaints concerning seeps. soil nitrates. and poor quality water wells in Runnels. Concho. and Tom Green Counties. Documentation does not point to a specific pollution problem attributable to an improperly plugged well. Bureau study furnished to EPA concludes that the poor quality of the water well cited in the Report was due to the leaching of mineral matter in the soil zone. v.7- v- A- I. 1 Variations in state requirements can reflect a variety of legitimate conditions or policies. There are differences between Kansas and Alaska, and between Louisiana and Texas, Just as between Nest Texas and East Texas. Because conditons are different across Texas, our rules require a case-by-case review of each situation. In closing, please let me emphasize what I mentioned at the beginning of my statement. The Report focuses too much on what EPA perceives as weaknesses with State regulatory programs and industry practices. It fails to recognize the trenendous progress that has been made in the last decade by the States and the industry. th not give credit where credit is due? Where does this leave us? Although maybe not a hazardous waste regulatory determination for oil and gas wastes and fluids. I read the Report to leave EPA with the opportunity to impose future. unnecessary regulations or other requirements regarding pits. injection wells. and discharges without having to secure approval from Congress. He could probably argue for ages about the cost of additional regulations and about the amount of production which will be lost. but that is beside the point. The Commission's programs. including state-of-the-art rules and regulations. together with waste management practices. provide for the necessary leVel of protection to the environment and human health. If there is no added protection for the cost. then the expenditure of even a single dollar or the loss of a single barrel of oil is too much. i 7v? HOLIDAY DENVER. COLORADO. FEBRUARY 25. 1988 STATEMENT BY DONALD B. BASKO REPORT TO CONGRESS MANAGEMENT OF WASTE FROM THE EXPLORATION. DEVELOPMENT, AND PRODUCTION OF CRUDE OIL, NATURAL GAS. AND ENERGY Gentlemen: I appreciate the opportunity to comment on the report that EPA has prepared and submitted to Congress on the management of waste from the exploration, development. and production of crude oil. natural gas. and geothermal energy. I must admit that I have comented extensively on these proceedings since the draft report was first made available to the public and to the agencies involved. I put together a report of my own that exceeded one hundred pages in length and which included photographs supporting and depicting my position. On September 18, 1987. I took Messers Truett DeGeare and Dan Durkis from the Washington office of EPA to the field in order that they might view typical examples of oil and gas operations in Wyoming. Mr. DeGeare and Mr. Durkis were able to view first-hand drilling, completions. perforating. fracture treatment. and gas recycling operations in Wyoming. We discussed the guidelines and regulations under which oil and gas operators are allowed to proceed. It was my belief that at the conclusion of a tour that took the best part of a day, both Mr. DeGeare and Mr. Durkis had a much better understanding of operations in Wyoming. I would hope that the field trip, in some small way. resulted in EPA reaching the decision that no additional regulation of oil or natural gas is necessary at this time. I certainly agree with that conclusion and urge that. if in the final analysis EPA finds that some additional enforcement activity is necessary, EPA regionalize those efforts through the Interstate Oil Compact Commission. the . Rocky Mountain Oil and Gas Association, or the Petroleum Association of Wyoming. My position is that "Hhat is good for Hest Virginia, Texas. or California. is not necessarily good for Wyoming.? I am delighted that the final report has been improved so vastly over the earlier editions. However, it still bothers me that EPA persists in reporting so-called damage cases in Wyoming that I feel are not necessarily genuine damage cases. A classic example of my position on this issue is the so-called a Construction Company damage case in Laramie County where allegedly a dumped drilling fluids illegally into a stock pond on a rancher's property. I alleged in my rebuttal that the dumping which took place was with the full knowledge. and probably the consent and encouragement, of the rancher. On further investigation I find that this is exactly what happened. The fact that our own Department of Environmental Quality made such an issue of this case does not necessarily point out a weakness in our regulations. I admit that discharge of drilling fluids is contrary to the DEQ's regulations, but it seems to me that we are splitting hairs when we start talking about whether or not there has been adherence with a specific regulation when the action which took place was with everyone's full knowledge and with consent among the parties involved. Additionally. no damage to the environment resulted and had a permit been obtained, the company's actions would have been absolutely legal. If all of the facts were known about the damage cases in Hyoming. three of the four that have been retained in the study would be thrown out. I still take exception to the broad allegations regarding reclamation and management of state or fee lands made by our own Department of Environment Quality that had been repeated time and time again by EPA. I refuted these allegations -7- taut-?Q . . in my submittals with pictorial evidence that reclamation on state and fee lands is every bit as good as on federal lands, and that the Oil and Gas Comission's regulations regarding drilling activity on all lands and the reclamation thereof is as strict as any other agency. lie are currently in the process of developing a conputer tracking system for all the pits in the state as well as other waste disposal. This information is partially gathered from our newly adopted Form 16-A and Form 16-13. It is unfortunate that the EPA chose to confide in the Department of Environmental Quality about oil and gas matters before they came to the Hyoming Oil and Gas Conservation Commission. It is the Conmission that is the primary regulatory body in the state and the Conanission's jurisdiction extends not only to state and fee lands, but we also have overlapping jurisdiction on federal lands. He have in the last five years, starting in 1983, revised and stepped-up our activity regarding all oil and gas field pits. and feel that we currently have an excellent handle on the entire situation. The State Legislature during the last session felt that this was likewise the case, and took away the Department of Environmental Quality's authority over pits and put that responsibility with the exception of comercial pits and those associated with gas plants under the Commission. The concern of the Department of Environmental Quality regarding increased oil and gas activity in frontier areas is exactly cantrary to what in reality is happening. If you look at the attitude of the U.S. Forest Service and the BLH, it is easy to realize that instead of more lands becoming available for oil and gas exploration. the number of acres open for exploration diminishes with each new environmental assessment. environmental impact statement. management framework plan. Or any of a number of other governmental publications that are Ia?n1 generated in the various district offices of those organizations throughOut the Rocky Mountain area. In conclusion. I would like to say that I believe the EPA got off to a bad start with this study in a number of the producing states by going to the Environmental Agencies instead of the oil and gas agencies that regulate the activity with which they were concerned. If this was done through ignorance, I can understand that and live with it. If this was a deliberate attempt to circumvent those agencies because they felt that the opinions they got from oil and gas agencies would be tainted in some way, I resent the approach deeply. Insofar as any additional regulations are concerned. I am gratified that EPA has taken the position that no additional regulations are necessary at this time. As I said before. I highly recomend that if the final report dictates that some additional enforcement is necessary. the EPA work through the various oil and gas agencies on a regional basis. I also want to remind you that we have taken steps to increase our surveillance and regulatory authority governing all of the various pits within the state and have reporting requirements that I feel adequately protect the environment. Industry does not need the financial or regulatory burden of any more rules if it is to survive. In spite of the turn-down in activity. operators who continue to drill are required to be every bit as careful with the operations they conduct and the environment as they were when oil was forty dollars a barrel. I would be happy to answer any questions that may arise. I appreciate the opportunity to cement. Thank you very much.